BP Amoco's operating profit surges 93 percent

Posted: Thursday, February 15, 2001

By BRUCE STANLEYAP Business Writer

LONDON -- Higher prices for crude oil and the integration of newly acquired businesses more than offset pinched profits in the chemicals business and helped BP Amoco PLC nearly double its fourth-quarter operating profit to $4.09 billion.

The company said Tuesday that increased oil and gas production volumes and its success in cutting costs contributed to the quarterly 93 percent rise from last year's operating profit of $2.12 billion.

On an annual basis, BP Amoco's operating profit not including one-time gains and losses more than doubled to $14.2 billion from $6.21 billion.

Chief executive Sir John Browne called the result ''outstanding,'' but that didn't stop BP Amoco's shares from slipping to 587 pence ($8.51) each after peaking earlier at 614 pence ($8.90). The company's U.S.-traded shares fell $2.52, or 4.7 percent, to $50.97 in afternoon trading on the New York Stock Exchange.

Like Royal Dutch/Shell Group of Cos., which also announced a surge in profit last week, BP Amoco benefitted from a surge in world oil prices that was beyond its control. The price for a barrel of North Sea Brent crude rose to $29.56 in the fourth quarter compared to $24.13 during the same three months of 1999.

Operating profit for BP Amoco's exploration and production business rose to $4.7 billion from $2.63 billion, after an adjustment for one-time gains and losses.

The company helped its bottom line by increasing quarterly output volumes by 9 percent over the previous year, due entirely to an increase in its production of gas. BP Amoco expects soon to reap profits from a gas project in Vietnam and fresh discoveries of oil off the coast of Angola and in the Gulf of Mexico.

Improved profit margins and the contribution from BP Amoco's buyout of Atlantic Richfield Co. drove a 211 percent increase in quarterly operating profit in its refining and marketing business. The unit's quarterly profit soared to $1.44 billion from $464 million.

Adjusted earnings at the company's chemicals business almost halved in the fourth quarter, due to steeper prices for oil -- its main raw material. A spike in gas prices and a weak euro exacerbated the downturn to $140 million from $266 million.

BP Amoco's Gas and Power boosted its quarterly operating profit to $60 million from $48 million, the company said.

Browne forecast that the company's business environment would stay ''generally positive'' in 2001, notwithstanding signs of a slowdown in global economic growth. Oil and gas prices would likely remain volatile, albeit at levels below those of last year, he said.

Short-term tightness in inventories of refined products should benefit profit margins in refining, while chemicals were expected to come under greater pressure from a slowing economy and excess production capacity in the industry, Browne said.